TMI Tax Updates - e-Newsletter
December 23, 2017
Case Laws in this Newsletter:
Articles
By: Ravi Kumar Somani
Summary: The article discusses the complexities surrounding the transfer of certain tax credits, such as Krishi Kalyan Cess (KKC), Education Cess, and Secondary and Higher Education Cess, to the Goods and Services Tax (GST) regime. While Section 140(1) of the GST law allows the carry forward of CENVAT Credit, disputes arise over whether these specific credits qualify. The article argues that these credits should be transferable under GST, despite revenue authorities' restrictive interpretations. It suggests strategies for businesses to manage these credits, including ignoring, reversing under protest, or utilizing them, while highlighting potential litigation risks.
By: DR.MARIAPPAN GOVINDARAJAN
Summary: The Payment of Gratuity (Amendment) Bill, 2017 aims to amend the Payment of Gratuity Act, 1972, primarily focusing on enhancing gratuity limits and maternity leave considerations. It proposes changes to the definition of 'notification' and allows for the extension of maternity leave from twelve to twenty-six weeks for continuous service calculation, aligning with the Maternity Benefit (Amendment) Act, 2017. The bill also seeks to empower the Central Government to adjust the gratuity ceiling, currently set at 10 lakhs, to reflect inflation and wage changes, potentially increasing it to 20 lakhs, similar to Central Government employees.
News
Summary: The government has implemented measures to facilitate easy loans for Micro, Small, and Medium Enterprises (MSMEs). These include advising Scheduled Commercial Banks (SCBs) to achieve a 20% annual growth in credit to Micro and Small Enterprises (MSEs) and allocating 60% of MSE advances to micro enterprises. SCBs are also instructed to avoid collateral for loans up to Rs. 10 lakh in the MSE sector. The Small Industries Development Bank of India (SIDBI) launched the Udyamimitra Portal to enhance loan accessibility, allowing entrepreneurs to apply online for loans up to Rs. 2 crore. This initiative was announced by a government official in the Lok Sabha.
Summary: Rs. 103.45 crores have been disbursed to Alternative Investment Funds (AIFs) under the Fund of Funds for Startups (FFS) scheme by the Small Industries Development Bank of India (SIDBI) as of December 15, 2017. Eighteen AIFs have received fund commitments, with 13 commencing drawdowns, investing in 77 startups. The distribution of AIFs and funded startups is spread across various states, including Delhi, Karnataka, Maharashtra, Tamil Nadu, and Telangana. Karnataka and Maharashtra lead in both AIF commitments and startup investments, with 28 and 23 startups funded, respectively. This information was provided in a written reply in the Lok Sabha.
Summary: The Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a government initiative launched to provide financial security for senior citizens aged 60 and above. It offers an assured annual return of 8% for 10 years, with the government subsidizing any difference between this and the return generated by the Life Insurance Corporation of India. The scheme requires a minimum purchase price of Rs. 1,50,000 for a monthly pension of Rs. 1,000, and a maximum of Rs. 7,50,000 for Rs. 5,000 monthly. Exempt from Goods and Services Tax, the scheme is available for subscription until May 3, 2018.
Summary: The Government of India introduced an interest subvention scheme to provide affordable agricultural credit to farmers, offering a 2% reduction on short-term crop loans up to Rs. 3 lakh, with an additional 3% incentive for prompt repayment, reducing the effective interest rate to 4%. Initially available for one year, the subvention now extends up to six months post-harvest for small and marginal farmers with Kisan Credit Cards. Loans restructured due to natural calamities also benefit from the subvented rate. NABARD facilitated market borrowing for short-term loans, refinancing Cooperative Banks at a 4.5% interest rate. This was announced by the Minister of State for Finance.
Summary: Between November 2016 and March 2017, the Income-tax Department (ITD) identified undisclosed income of over Rs. 7,900 crores from searches on 900 groups and Rs. 6,700 crores from 8,200 surveys. From April to October 2017, searches on 275 groups revealed Rs. 7,800 crores, while 3,100 surveys detected Rs. 2,400 crores. Post-demonetization, taxpayer numbers increased, with 3.89 crore e-returns filed by November 2017, up 19.5% from the previous year. Direct tax collections rose to Rs. 4.8 lakh crore, a 14.3% increase. Measures to curb cash transactions included mandatory PAN for large deposits and restrictions on cash donations to political parties.
Summary: The government has prioritized infrastructure development to boost growth, launching the Bharatmala programme and mobilizing funds through innovative financial vehicles like Infrastructure Debt Funds, Real Estate Investment Trusts, and the National Investment and Infrastructure Fund. It has also introduced frameworks for municipal bonds and tax benefits for securitization trusts. Recognizing banks' asset-liability mismatch and stressed assets, the government has modified guidelines to allow flexible loan structuring and refinancing. NITI Aayog's Action Agenda emphasizes infrastructure's role in economic transformation, projecting significant investment increases. The 2017-18 budget allocated Rs. 3,96,135 crores to the infrastructure sector, as reported by the Finance Minister in Lok Sabha.
Summary: The Reserve Bank of India set the reference rate for the US Dollar at Rs. 64.0409 on December 22, 2017, slightly lower than the previous day's rate of Rs. 64.0883. The exchange rates for other currencies against the Rupee were also adjusted: the Euro was at Rs. 75.8821, the British Pound at Rs. 85.6739, and 100 Japanese Yen at Rs. 56.51. These rates are based on the middle rates of cross-currency quotes, and the Special Drawing Rights (SDR) to Rupee rate will be determined accordingly.
Summary: A meeting of four task forces on Methanol, chaired by a NITI Aayog member, reviewed efforts to advance the Methanol economy in India. Experts, scientists, and academicians discussed Methanol's potential as a clean, affordable energy source for transportation and cooking. India can produce Methanol from high ash coal using local technology, reducing its crude oil import bill. Existing facilities can be upgraded to convert coal, stranded gas, and biomass into Methanol. Collaboration with agencies, academia, and industry is deemed feasible for achieving production goals. The task forces, established six months ago, have held several meetings to promote the Methanol economy.
Summary: The International Monetary Fund (IMF) and World Bank (WB) have published the Financial System Stability Assessment (FSSA) and Financial Sector Assessment (FSA) for India, highlighting the country's strong economic growth and stable financial sector. The assessments commend India's efforts in tackling non-performing assets, bank recapitalization, and regulatory improvements. They note advancements in banking supervision, risk management, and the implementation of Basel III standards. However, vulnerabilities in some public sector banks necessitate further capital. Recommendations include improving governance and restructuring public banks. The reports also address securities market reforms, the development of a modern bankruptcy regime, and enhancements in insurance solvency frameworks.
Notifications
Customs
1.
56/2017 - dated
21-12-2017
-
ADD
Seeks to extend anti-dumping duty on Phthalic Anhydride originating in or exported from Korea RP, Chinese Taipei and Israel
Summary: The Government of India, through the Ministry of Finance, has issued a notification to extend the anti-dumping duty on Phthalic Anhydride imported from Korea RP, Chinese Taipei, and Israel. This extension follows a review initiated by the designated authority and is based on the Customs Tariff Act, 1975, and related rules. The duty, originally imposed in 2012, will remain in effect until December 23, 2018, unless revoked earlier. The amendment to the original notification ensures the continuation of these duties to protect domestic industries from dumped imports.
2.
95/2017 - dated
22-12-2017
-
Cus
Seeks to amend notification No. 152/2009-Customs dated 31.12.2009 so as to provide deeper tariff concessions in respect of specified goods imported from Korea RP under the India-Korea Comprehensive Economic Partnership Agreement (CEPA) w.e.f. 01.01.2018
Summary: The Government of India, through the Ministry of Finance, issued Notification No. 95/2017-Customs to amend Notification No. 152/2009-Customs, providing deeper tariff concessions for specific goods imported from Korea under the India-Korea Comprehensive Economic Partnership Agreement (CEPA), effective January 1, 2018. The amendments involve changes in tariff rates for various serial numbers in the notification's table, with specified entries in column (4) being replaced by new rates such as "16.50", "2.75", "13.75", among others. This amendment is made under the powers conferred by the Customs Act, 1962, in the public interest.
3.
94/2017 - dated
22-12-2017
-
Cus
Seeks to further amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide a deepen the concessional rate of basic customs duty in respect of tariff item 8708 40 00 [gear box and parts thereof, of specified motor vehicles], w.e.f. 1st of January, 2018, when imported under the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA)
Summary: The Government of India has issued Notification No. 94/2017-Customs to amend Notification No. 69/2011-Customs, dated 29th July 2011. This amendment, effective from 1st January 2018, modifies the concessional rate of basic customs duty for tariff item 8708 40 00, which includes gearboxes and parts for specified motor vehicles. This change applies to imports under the India-Japan Comprehensive Economic Partnership Agreement. The duty rate for this tariff item is revised to "6.88" as per the amendment.
4.
93/2017 - dated
21-12-2017
-
Cus
Seeks to impose 30% Basic Customs Duty on Chana (Chickpeas) and Masoor (Lentils)
Summary: The Government of India, through the Ministry of Finance's Department of Revenue, issued Notification No. 93/2017-Customs on December 21, 2017. This notification amends a previous notification, No. 50/2017-Customs, to impose a 30% Basic Customs Duty on Chana (Chickpeas) and Masoor (Lentils). This amendment is made under the authority of the Customs Act, 1962, and the Customs Tariff Act, 1975, in the interest of public necessity. The notification modifies the entry at serial number 20 in the original notification's table, specifying the inclusion of these pulses for the duty imposition.
GST - States
5.
G.O.MS.No. 551 - dated
16-11-2017
-
Andhra Pradesh SGST
CORRIGENDUM - Government in Go.Ms.No.259, Revenue (Commercial Taxes-II) Department, dated the 29th June, 2017
Summary: The Government of Andhra Pradesh issued a corrigendum to amend the notification Go.Ms.No.259 from June 2017 regarding the Andhra Pradesh State Goods and Services Tax (SGST). Key amendments include changes to the wording in various sections and tables related to the valuation of services, financial services, and support services to agriculture. New definitions and explanations for terms such as "chit fund," "scheduled air transport service," and "agricultural produce" were added. The notification clarifies tax rates and input tax credits for specified services and is effective retroactively from July 1, 2017.
6.
G.O.MS.No. 494 - dated
3-11-2017
-
Andhra Pradesh SGST
Reduction of Goods and Services Tax rate of 2.5 per cent on Food preparations put up in unit containers and intended for free distribution to economically weaker sections of the society under a programme duly approved by the Central Government or any State Government.
Summary: The Government of Andhra Pradesh, following the recommendations of the Goods and Services Tax Council, has notified a reduced state GST rate of 2.5% on intra-state supplies of food preparations packaged in unit containers. These goods are intended for free distribution to economically weaker sections under programs approved by the Central or State Government. This notification, effective from October 18, 2017, requires suppliers to provide a certificate from a Deputy Secretary-level officer confirming the free distribution of these goods within five months of supply, with possible extensions granted by tax authorities.
7.
17/2017 – State Tax - dated
23-11-2017
-
Kerala SGST
Seeks to extend the due dates for the furnishing of FORM GSTR-1 for those taxpayers with aggregate turnover of more than ₹ 1.5 crores
Summary: The Government of Kerala's State Goods and Services Taxes Department issued Notification No. 17/2017, extending the deadlines for filing FORM GSTR-1 for taxpayers with an aggregate turnover exceeding 1.5 crore rupees. The revised deadlines are as follows: for July to October 2017, the deadline is 31st December 2017; for November 2017, 10th January 2018; for December 2017, 10th February 2018; for January 2018, 10th March 2018; for February 2018, 10th April 2018; and for March 2018, 10th May 2018. Further extensions for other returns will be announced in the Official Gazette.
8.
16/2017 – State Tax - dated
23-11-2017
-
Kerala SGST
Notification regarding last date for filing of return in FORM GSTR-3B
Summary: The Government of Kerala's State Goods and Services Taxes Department issued Notification No. 16/2017, specifying the deadlines for filing the GSTR-3B return for January, February, and March 2018. The returns must be submitted electronically via the common portal by February 20, March 20, and April 20, 2018, respectively. Registered individuals are required to settle their tax liabilities, including taxes, interest, penalties, and fees, by debiting their electronic cash or credit ledger by the respective deadlines for each month's return filing.
9.
14/2017 – State Tax - dated
24-10-2017
-
Kerala SGST
Extension of time for declaration in FORM GST ITC-01
Summary: The Kerala State Goods and Services Tax Department has issued Notification No. 14/2017, extending the deadline for registered persons to submit FORM GST ITC-01. This extension applies to those who became eligible for input tax credit during July, August, and September 2017. The new deadline for making this declaration is set for October 31, 2017, as per section 168 of the Kerala Goods and Services Tax Ordinance, 2017, and relevant rules.
10.
13/2017 – State Tax - dated
24-10-2017
-
Kerala SGST
Seeks to extend the time limit for filing FORM GSTR-6
Summary: Notification No. 13/2017 issued by the Kerala State Goods and Services Tax Department extends the deadline for Input Service Distributors to file FORM GSTR-6. Originally set under notification No. 10/2017, the new deadline for filing returns for July, August, and September 2017 is now extended to November 15, 2017. This extension is enacted under the authority of sub-section (6) of section 39 and section 168 of the Kerala Goods and Services Tax Ordinance, 2017, and supersedes the previous notification, except for actions already completed.
Circulars / Instructions / Orders
GST
1.
Order No. 11/2017 - dated
21-12-2017
Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03
Summary: The Government of India has extended the deadline for submitting details of stock held before opting for the composition levy under the Central Goods and Services Tax (CGST) Act, 2017. Initially set by Order No. 05/2017-GST, the new deadline for filing FORM GST CMP-03 is now 31st January 2018. This extension is enacted under the authority of sub-rule (4) of rule 3 of the CGST Rules, 2017, and section 168 of the CGST Act, 2017, following recommendations from the Council.
2.
24/24/2017 - dated
21-12-2017
Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger- Reg.
Summary: The circular addresses the manual filing and processing of refund claims under the Goods and Services Tax (GST) framework due to the unavailability of an online refund module. It mandates manual submission of documents for refund claims related to the inverted duty structure, deemed exports, and excess electronic cash ledger balances. Refunds must be filed monthly using FORM GST RFD-01A, with quarterly submissions allowed for smaller businesses. Specific forms and statements are required for different refund types. The circular emphasizes compliance with the CGST Act and Rules, coordination between Central and State tax authorities, and outlines the process for refund claims and payments.
3.
25/25/2017-GST - dated
21-12-2017
Manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling - reg
Summary: The circular addresses the manual filing of applications for Advance Ruling and appeals before the Appellate Authority due to the unavailability of electronic forms on the common portal. Rule 107A allows manual submissions for processes prescribed in Chapter XII of the CGST Rules. Applications for Advance Ruling must be submitted in FORM GST ARA-01 with a fee of Rs. 5,000, while appeals require FORM GST ARA-02 with a fee of Rs. 10,000, both payable online. The signing requirements for various entities and specifies that appeals must be filed within 30 days of receiving the ruling. The circular encourages issuing trade notices to inform the public.
4.
23/23/2017 - dated
21-12-2017
Issues in respect of maintenance of books of accounts relating to additional place of business by a principal or an auctioneer for the purpose of auction of tea, coffee, rubber etc.- regarding
Summary: The circular addresses the challenges faced by principals and auctioneers in maintaining books of accounts at each additional business location for auctioned goods like tea, coffee, and rubber. It clarifies that under the CGST Act, both parties must declare warehouses as additional business places and maintain accounts there. However, if difficulties arise, they may keep accounts at their principal business location after notifying the relevant officer. They are eligible for input tax credit, provided other Act provisions are met. This guidance is specific to goods supplied through auctions where auctioneers claim input tax credit.
5.
22/22/2017 - dated
21-12-2017
Clarification on issues regarding treatment of supply by an artist in various States and supply of goods by artists from galleries–Reg.
Summary: The circular addresses the taxation of art supplies by artists across different states. It clarifies that art moved for exhibition in galleries is not considered a supply until a buyer selects the artwork, at which point a tax invoice is issued. Movement of art for exhibition is done via a delivery challan and e-way bill, if applicable. Inter-state supplies are subject to integrated tax under the Integrated Goods and Services Tax Act, 2017. The circular aims to ensure uniform implementation of these rules and requests dissemination of this information through trade notices.
Customs
6.
51/2017 - dated
21-12-2017
Implementing Electronic Sealing for Containers by exporters under self-sealing procedure by Circular 26/2017-Cus dated 01.07.2017, 36/2017 dated 28.08.2017, 37/2017 dated 20.09.2017, 41/2017 dated 30-10-2017 and 44/2017 dated 18-11-2017.-reg.
Summary: The circular from the Ministry of Finance, Department of Revenue, addresses the implementation of electronic sealing for containers by exporters under the self-sealing procedure. Due to insufficient stock of e-seals, the Board has decided that the procedure will remain voluntary until March 1, 2018, for certain ports and ICDs. After this date, it will become mandatory for exporters with self-sealing permissions and AEO exporters at specified locations. From April 1, 2018, the e-sealing procedure will be mandatory for all other ports and ICDs. Exporters who have already adopted the e-sealing procedure may continue, and any difficulties should be reported to the Board.
Highlights / Catch Notes
GST
-
Deadline Extended for Submitting Stock Details Before Opting for Composition Levy in FORM GST CMP-03 Under CGST Rules.
Circulars : Extension of time limit for intimation of details of stock held on the date preceding the date from which the option for composition levy is exercised in FORM GST CMP-03 - CGST - Circular
-
CGST Refund Claims Process for Inverted Duty, Deemed Exports, and Excess Cash Ledger Balances Simplified for Taxpayers.
Circulars : Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger- Reg. - CGST - Circular
-
Manual Filing Procedures for Advance Ruling Applications and Appeals Under CGST Framework Outlined in New Circular.
Circulars : Manual filing of applications for Advance Ruling and appeals before Appellate Authority for Advance Ruling - reg - CGST - Circular
-
Sellers and buyers must declare warehouses for tea, coffee, and rubber as an additional business location.
Circulars : The principal and the auctioneer of tea, coffee, rubber etc. are required to declare warehouses where such goods are stored as their additional place of business. The buyer is also required to disclose such warehouse as his additional place of business if he wants to store the goods purchased through auction in such warehouses.
-
Artists' Artworks in Galleries: GST Applies Only on Buyer Selection, Not on Initial Gallery Exhibition.
Circulars : In case of supply by artists through galleries, there is no consideration flowing from the gallery to the artist when the art works are sent to the gallery for exhibition and therefore, the same is not a supply. It is only when the buyer selects a particular art work displayed at the gallery, that the actual supply takes place and applicable GST would be payable at the time of such supply.
Income Tax
-
ACIT issues summons u/s 131; petitioner's immunity claim under Diplomatic Relations Act denied due to Section 8 limitations.
Case-Laws - HC : Immunity - Summons u/s 131 by ACIT calling upon the petitioner to attend the office of the respondent No.3 for recording his statement - - The provisions of the Diplomatic Relations (Vienna Convention) Act, 1972 relied upon by the learned counsel for the petitioner also do not envisage any such immunity and Section 8 of the Diplomatic Relations (Vienna Convention) Act, 1972 - HC
-
Finance Costs Reassessment Allowed: Section 36(1)(iii) Doesn't Prevent Revenue From Reviewing Claims Yearly Despite Past Acceptances.
Case-Laws - AT : Disallowance of Finance Cost incurred during the year under the consideration u/s 36(1)(iii) - mere acceptance of the claim in earlier years in proceedings u/s 143(1) does not debar Revenue from examining the claim on merits in subsequent years and does not create a bar of res-judicata . - AT
Customs
-
Amendment to Notification No. 69/2011-Customs reduces customs duty on gearboxes for motor vehicles under India-Japan Agreement.
Notifications : Seeks to further amend Notification No. 69/2011-Customs, dated 29th July, 2011 so as to provide a deepen the concessional rate of basic customs duty in respect of tariff item 8708 40 00 [gear box and parts thereof, of specified motor vehicles], w.e.f. 1st of January, 2018, when imported under the India-Japan Comprehensive Economic Partnership Agree - Notification
-
India Proposes 30% Basic Customs Duty on Chickpeas and Lentils, Ending Previous Exemptions.
Notifications : Seeks to impose 30% Basic Customs Duty on Chana (Chickpeas) and Masoor (Lentils) - Exemption withdrawn
-
Terminal Excise Duty Refund Eligibility Disputed Under CENVAT Regime and Central Excise Act Interpretation.
Case-Laws - HC : Refund of Terminal Excise Duty (TED) - why the respondents were of the view that refund claim or benefit under the CENVAT regime under the Central Excise Act or the other statutory schemes framed under it is available - HC
-
NPL and Solvay Ruled Unrelated for Anti-Dumping Duty; Companies Act Provisions Not Applicable.
Case-Laws - AT : Levy of ADD - It is clear that the DA on careful consideration arrived at the conclusion that NPL was not to be considered as a related company of Solvay. It was further recorded that the provision of Companies Act or provision relating to special resolutions are not relevant for the present investigation. We are in agreement with the findings recorded by the DA. - AT
Indian Laws
-
Court Rules Special Director Not Liable for Cheque Dishonor; No Vicarious Liability u/s 138.
Case-Laws - HC : Liability of applicant, Special Director of the accused company - dishonour of the cheques - No vicarious liability can be fastened on the applicant herein, he being appointed as a Special Director by the Board for Industrial And Financial Reconstruction. - HC
Service Tax
-
Coal Transport Oversight Not Classified Under Clearing and Forwarding Agent Service Per Service Tax Case Law.
Case-Laws - AT : Classification of services - their activities are merely to supervise the quantity and monitoring the loading, movement of coal from the collieries by Railways in receipt of the same at the destination of rakes are not to be organized by the appellant - the services provided by the appellant are not classifiable under C&F Agent Service - AT
-
Sugar Quota Transfer Classified as Goods Sale, Not Service, Affecting Tax Treatment Under Service Tax Rules.
Case-Laws - AT : Nature of transaction - service or goods - transfer of rights and privilege of export of sugar quota - the transaction in question regarding sale of rights and privilege of export of sugar quota is sale of goods and no service is involved - - AT
Central Excise
-
Delay in Show Cause Notice Not Attributable to Appellants; Section 11A(1) Cannot Justify Officer Inaction.
Case-Laws - AT : Extended period of limitation - The appellants cannot be blamed for about three years long delay in issue of the show cause notice. The proviso to sub Section 11A(1) cannot be used to cover up indolence on the part of the Jurisdictional Central Excise Officers - AT
VAT
-
Contract Focuses on Equipment Supply, Erection, and Installation; Dominant Purpose is Equipment Sale, Not Works Contract.
Case-Laws - HC : Works contract or contract for Sale - the contract in the instant case is predominantly for supply of equipment, erection and installation - The intention of parties as derived from the diverse contractual provisions set out above leaves us in no manner of doubt that the contract in question was not a works contract but the dominant intention was of sale of equipment. - HC
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